The No. 1 Reason Reorgs Go Bad

An organization should be designed around its strategy and values. If the strategy is to deliver better customer service than competitors, and a core value is to listen and act on what customers have to say, then you need to have a an organizational structure that creates opportunities and accountability throughout for accomplishing those things.

But here's what can happen inside a company that will throw this purposeful, powerful structure out of whack. The brilliant sales vp Bobby Jones over at Acme Widgets is lured to your company to lead one of the sales units. Turns out, after six months, that Bobby is a great salesman, but a lousy manager. Now the company can't afford to lose Bobby--he's generating too much income--so instead of demoting him the CEO decides to have him report to a hand-holding manager who will occupy a new box on the org chart.

Too often, organizations change their structure to accommodate great performers or underperforming ones. And over a number of years, as these accommodations pile up, the once clean org chart mutates into a Rube Goldberg contraption, dangerously unbalanced by unclear reporting schemes, diffused accountability, and personal fiefdoms.

Like putting strokes and airplane landings, organizations must have a basic simplicity about them. Problem is, reorgs often bring more complexity.

Over at HBR.org, a couple of powerful posts ruminate on what makes for successful reorganizations. In The Importance of Organizational Design and Structure, executive coach Gill Corkindale notes that reorgs often don't go far enough. "When organizational strategy changes, structures, roles, and functions should be realigned with the new objectives. This doesn't always happen, with the result that responsibilities can be overlooked, staffing can be inappropriate, and people -- and even functions -- can work against each other."

Ron Ashkenas proposes Solving the Rubik's Cube of Organizational Structure. To address a dysfunctional organization, he says, a company's leaders must answer three questions:

  1. Is the problem the structure, or the way we are managing it?
  2. Does the structure match our strategy?
  3. Has our organization design been compromised by accommodating to personalities?
Just having corporate conversations around these questions is a healthy exercise, even if there is no clear outcome.

Look around you. Is your company designed to reflect strategy and values? How would you change it?

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(Photo by Flickr user zappowbang, CC 2.0)